Internal Controls

Most governments own a variety of assets that they track and inventory, beyond what they do for financial reporting purposes. We call them small and attractive assets here in Washington state, but across the nation, people refer to them as theft-sensitive assets, walk-away assets or controlled assets.  

Small and attractive assets tend to mysteriously disappear more than other asset types, due to their portability and attractiveness for personal use. Employees might also find them easy to resell for cash. Some examples include computers, power tools and shop equipment. 

How long has it been since your government evaluated its credit card program? Was it when we published our original best practice resource in July 2019, just before the start of the COVID-19 pandemic?

Imagine you just bought a home, but you don’t like the kitchen because it’s outdated. Since this is potentially your “forever home,” it makes sense to update the kitchen so you can enjoy it for years to come. In a similar situation, a local government keeps its capital asset records for years – sometimes decades – so why not take the time to improve them? Like the kitchen, the investment in improving your capital asset management system is worth it because you can reap the long-term benefits.

Employees are on the road again, traveling to various in-person trainings and conferences. Given this, one cannot help but wonder about the internal control systems for processing employee reimbursements and travel claims. Are they ready to handle this activity and prevent waste, loss or abuse?

A new year has begun, which means it's time for cash-basis governments to close out the last year and begin preparing their annual financial reports. It also means it’s time for us to share our updated Checklist for Preparing and Reviewing Cash-Basis Financial Statements.

As we performed federal single audits this year, a common issue arose – a lack of compliance with federal wage rate requirements. Much of the issue stems from local governments that managed federally funded construction projects for the first time but did not provide enough training to their staff on federal wage rate requirements.

One of the best tools in your fraud-fighting toolbox is a bank statement review. Whether you are a finance professional, a department head, or even an elected or appointed official, reviewing the bank statements can greatly increase your odds of deterring and detecting fraud.

Fuel prices can be volatile. When they rise, governments will feel it in higher fleet-operation budgets, and employees will feel it in their wallets. And here at SAO, we will likely see more local government reports of known or suspected fuel-related losses and frauds.

Accounts payable is a process that delivers significant payments to vendors for goods and services and keeps local government operational. While the tasks that make up your accounts payable process may seem repetitious and mundane, they serve a critical business function—and they are vulnerable to fraud and error. When was the last time you took a hard look at your accounts payable process to ensure it's still designed appropriately and functioning properly?

When was the last time you reviewed and updated your deposit process? Deposits become so routine that it is easy to forget that your internal controls might need adjusting as your financial activity changes over time. On top of that, there are new options and technology for deposits that can help you strengthen your security measures.

Here are some tips and resources to get you started: